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Who Is Required to File IRS Form 720?

A Small Recap About Form 720

IRS Form 720, the Quarterly Federal Excise Tax Return, is used by businesses and entities that are subject to federal excise taxes on specific goods, services, or activities. These taxes apply to a wide range of products and services, such as fuel, airline tickets, heavy trucks, indoor tanning services, and more. The excise taxes are often included in the cost of the product, and it is typically the responsibility of manufacturers, retailers, or importers to file the form and pay the tax to the IRS.

Form 720 is filed quarterly to report excise taxes for each quarter of the calendar year. The IRS specifies who must file Form 720 based on their involvement in goods or services subject to excise taxes. Let's explore the entities that are required to file this form.

Who Needs to File IRS Form 720?

If your business deals with products or services that are subject to federal excise taxes, you are required to file Form 720. This includes:

1. Businesses Involved in Goods or Services Subject to Excise Tax

Businesses that manufacture, sell, or import goods or services subject to excise tax must file Form 720. Examples of taxable goods and services include:

• Gasoline and other fuels

• Air transportation services

• Passenger ship transportation

• Fishing equipments

• Indoor tanning services

• Tires

• Vaccines

• Bows and arrows

• Coal

• Obligations

• Repurchase of corporate stock

If your business deals with any of these products or services, you must file Form 720.

2. Manufacturers and Producers

Entities that manufacture, produce, or import specific goods are responsible for reporting and paying federal excise taxes using Form 720. This includes:

• Sport Fishing Equipment: Manufacturers or importers of fishing rods, reels, tackle boxes, and related accessories must pay a 10% excise tax on the sales price, excluding fishing rods and poles, which are taxed at a maximum of $10 per article.

• Archery Equipment: Manufacturers or importers of bows, quivers, broadheads, and arrow shafts are subject to an 11% excise tax on bows and a per-unit tax on arrow shafts, with specific exemptions for certain wooden arrows.

• Vaccines: Manufacturers or importers of taxable vaccines, such as DPT, MMR, and polio vaccines, must pay an excise tax per dose, with rates varying by vaccine type.

• Tires: Manufacturers or importers of taxable tires are subject to an excise tax based on the tire's weight and type, with rates varying accordingly.

• Heavy Trucks and Trailers: Manufacturers or importers of heavy trucks and trailers with a gross weight of 33,000 pounds or more must pay a federal excise tax on the sale of these vehicles.

• Coal: Producers of coal are subject to excise taxes based on the method of mining and the weight of the coal produced.

• Obligations: Issuers of obligations not in registered form must pay an excise tax per obligation issued.

• Repurchase of Corporate Stock: Corporations that repurchase their own stock are subject to an excise tax on the repurchased amount.

These taxes are reported and paid quarterly using Form 720, and it's essential for businesses in these sectors to comply with the filing requirements to avoid penalties.

3. Importers

Importers of goods subject to excise tax are responsible for filing Form 720. For example, imported trucks or trailers may be subject to excise taxes based on their weight or usage. It is important for importers to understand the tax classifications for the goods they bring into the country.

4. Retailers and Sellers

Retailers who sell goods or services that are subject to excise tax must file Form 720. For example:

• Businesses providing indoor tanning services

• Retailers selling heavy trucks or trailers based on their gross weight

• Sellers of certain ozone-depleting chemicals

Retailers and service providers who are responsible for collecting excise taxes on the sale of these goods or services must file Form 720.

5. Entities Responsible for Collecting Excise Tax

If your business is responsible for collecting any of the excise taxes listed on Form 720, you must file the form for the relevant quarter. The IRS requires entities to file Form 720 if they were liable for, or responsible for collecting excise taxes during the current quarter or any previous quarter.

Excise Tax Categories Covered in Form 720

Below is a list of the excise tax categories for which businesses are required to file Form 720:

Part I: Environmental Tax

• Domestic Petroleum Oil Spill Tax (18)

• Imported Petroleum Products Oil Spill Tax (21)

• Ozone-Depleting Chemicals (ODCs) (98)

• ODC - Tax on Imported Products (19)

• Chemicals (Other Than ODCs) (54)

• Imported Chemical Substances (17)

• Imported Petroleum Products Superfund Tax (16)

• Domestic Petroleum Superfund Tax (53)

Communications and Air Transportation Taxes

• Local Telephone and Teletypewriter Exchange Services (22)

• Transportation of Persons by Air (26)

• Transportation of Property by Air (28)

• Use of International Air Travel Facilities (27)

Fuel Taxes

• Diesel Tax (60)

• Liquefied Petroleum Gas (LPG) (112)

• Diesel Water Fuel Emulsion (104)

• P Series - Fuels (118)

• Compressed Natural Gas (120)

• Liquefied Hydrogen (121)

• Fischer-Tropsch Process Liquid Fuel From Coal (122)

• Liquid Fuel Derived From Biomass (123)

• Liquefied Natural Gas (LNG) (124)

• Kerosene Tax (35)

• Gasoline Tax (62)

• Dyed Diesel Fuel, LUST Tax (105)

• Other Fuels (79)

• Dyed Kerosene, LUST Tax (107)

• LUST Tax on Other Exempt Removals (119)

• Kerosene for use in Aviation (69)

• Kerosene for use in Commercial Aviation (77)

• Kerosene for use in Aviation, LUST Tax on Nontaxable Uses (111)

• Any Liquid Fuel Used in a Fractional Ownership Program Aircraft (13)

• Aviation Gasoline (14)

Retail Tax

• Truck, Trailer, and Semitrailer Chassis and Bodies, and Tractor (33)

Ship Passenger Tax

• Transportation by Water (29)

Foreign Insurance Tax

• Policies Issued By Foreign Insurers (30)

Manufacturers Taxes

• Coal - Underground Mined - Per Ton (36)

• Coal - Underground Mined - Sales Price (37)

• Coal - Surface Mined - Per Ton (38)

• Coal - Surface Mined - Sales Price (39)

• Taxable Tires Other than Bias Ply or Super Single Tires (108)

• Taxable Bias Ply or Super Single Tires (109)

• Taxable Tires, Super Single Tires Designed for Steering (113)

• Gas Guzzler Tax (40)

• Vaccines (97)

Other Excise Tax
Obligations (31)

Part II: Additional Excise Taxes

• Sport Fishing Equipment (41)

• Fishing Rods and Fishing Poles (110)

• Electric Outboard Motors (42)

• Fishing Tackle Boxes (114)

• Bows, Quivers, Broadheads, and Points (44)

• Arrow Shafts (106)

• Indoor Tanning Services (140)

• Inland Waterways Fuel Use Tax (64)

• LUST Tax on Inland Waterways Fuel Use (125)

• Biodiesel Sold As But Not Used As Fuel (117)

• Patient-Centered Outcomes Research Fee (133)

• Section 40 Fuels (51)

• Floor Stocks Tax (20)

• Repurchase of Corporate Stock (150)

Filing Frequency and Deadlines

Form 720 is a quarterly return, meaning businesses must file it up to four times a year. The due dates for Form 720 are as follows:

1. Quarter 1 (January 1 - March 31): Due by April 30

2. Quarter 2 (April 1 - June 30): Due by July 31

3. Quarter 3 (July 1 - September 30): Due by October 31

4. Quarter 4 (October 1 - December 31): Due by January 31 of the following year

Businesses are required to submit their Form 720 by the last day of the month following the end of each calendar quarter.

The IRS provides two key criteria for when businesses must file Form 720:

1. If you are liable for or responsible for excise taxes in the current quarter: This applies to businesses that are responsible for collecting excise taxes during the quarter.

2. If you were liable for or responsible for excise taxes in any prior quarter and haven’t filed a final return: This applies to businesses that have collected excise taxes in previous quarters and need to file a return for those periods.

Conclusion

IRS Form 720 is an essential tax filing for businesses involved in the sale or import of goods and services subject to federal excise taxes. Whether you are a manufacturer, retailer, importer, or service provider, understanding your responsibility for excise tax collection and filing is crucial. By following the IRS guidelines and ensuring timely quarterly filings, you can remain compliant and avoid penalties. If your business deals with any of the products or services mentioned, make sure you file Form 720 as required by the IRS.

File your Form 720 online for Quarter 3 with efile720 - An IRS-Authorized online provider!